Jane is the President of a Canadian company called SmartStick Inc. ("SSI"). SSI is a manufacturer and supplier of specialty carpets. Customers of SSI are complaining that the non-slip backing on its carpets are not sticking to the floor properly and some of the rubber on the back of the carpets is peeling off. In order to fix the problem, Jane asks one of her employees, Renee, to find a new stronger, longer-lasting adhesive that SSI can use to attach the rubber to the backs of its carpets.

Renee starts searching the internet for a new supplier of adhesive but finds there are countless suppliers and it's very time consuming. As Renee is very IT savvy, on June 15th he creates an extra page on SSI's website with lots of key words relevant to adhesive providers and it states: "SSI needs a new adhesive and will contract with the party who will supply 25,000 kgs of clear, non-toxic adhesive and which costs no more than $100/kg."

Perfcement Corporation is a very small company located in Mumbai, India ("PC") that makes sealants and adhesives and has been in business for just under 2 years. Patrick is the President of the company. Cameron, an employee of PC who is keen to impress Patrick with new customers, sees SSI's webpage when he's at home that night using his work laptop. On June 16th, Cameron sends an email to the link he finds at the bottom of the SSI webpage and writes: "Very pleased to see this; can guarantee supply of hyper-sticky, safe, clear adhesive for $90/kg; delivery within 15 days; payment in 30 days; suggest we get together and we'll present the purchase at Perfcement's location at 1400 Corporate Crescent, Detroit, USA on June 20th, 4:00pm, Conference Room B".

Renee sees the email the following day. He quickly forwards it to Jane, copying Cameron, and advises Jane that he's located a new provider at a great price. Jane glances at the email while rushing to a meeting. The words "hyper-sticky" grab her attention so she excitedly replies to all writing: "This is outstanding - I need clear adhesive that bonds extremely well - see you soon!"

June 20th, Patrick and Jane meet at PC's Detroit, USA location. Patrick gives Jane a brief presentation about PC's adhesive. At the end he says, "We're so happy to complete this deal with you, we'll prepare it immediately, delivering quickly, maximum two weeks to get to you." He then suggests they discuss things further over food and beverages at his favorite restaurant.

Patrick takes Jane to a posh Italian-style restaurant. After several hours of chatting and enjoying several courses of food paired with expensive wines, Patrick pays for the entire bill which amounts to $1,875.00 while Jane is at the front desk calling a cab. Jane gets back to the table and learns that Patrick has paid the bill. She hugs him, shakes his hand and says "Pat, you folks got me at hypersticky; no need to speak anymore or do anything else, send the 25,000kg of non-toxic, clear adhesive within 10 days and I'll send you big payment in full by the end of the month".

Patrick arrives back at his facility in India the following day and thanks Cameron for his great work closing the deal with SSI. Cameron quickly ships out 25,000kg of clear adhesive, and then emails Renee with: "Good day Sir - confirmed - delivery forthcoming - 25,000kg of product - due 15 days - Price $2,250,000.00 - due 30 days." Renee sees the email as he's leaving work that day, quickly reads it and replies: "Got it."

June 31st, SSI receives the adhesive. SSI applies it to the carpets and ships to their customers. Within a week, problems begin; customers are complaining that the carpets are leaving marks on their floors. SSI stops all manufacturing to investigate the issue, recalls carpets recently shipped to 10 customers, and telephones 5 other customers that their upcoming orders will be late. The 5 customers are angry and terminate their contracts with SSI. When investigating, SSI notices that the adhesive is opaque/grey in colour. Jane calls Patrick telling him there's a huge problem, the adhesive does not meet SSI's needs so SSI is not paying.

Questions:

1. Was there a valid contract? Explain why or why not.

2. Explain the arguments of both sides if SSI sues for breach of contract, and what you think the remedy would be?

3. a) Is there any issue with Patrick paying for the restaurant bill? Explain why or why not.

b) Would your answer to (3a) be any different if:

(i) PC was a United Kingdom company? Explain.

(ii) It wasn't SSI purchasing the adhesive but was the Canadian Government? Explain.

4. SSI needs an alternative supplier of adhesive for its carpets. Jane is considering the possibly of buying from a company located in China. What are some of the legal and trade considerations that SSI should consider when looking at companies located in China?